Question 1

The primary objective of procedures performed to obtain an understanding of the entity's internal control is to provide an auditor

Accepted Answer

A)  The knowledge necessary for audit planning. 
B)  The evidential matter to use in assessing inherent risk. 
C)  A basis for modifying tests of controls. 
D)  An evaluation of the consistency of application of management's policies. 
A)  The knowledge necessary for audit planning. 
B)  The evidential matter to use in assessing inherent risk. 
C)  A basis for modifying tests of controls. 
D)  An evaluation of the consistency of application of management's policies.

Question 2

In computer systems,the information technology general controls (ITGC)would not include

Accepted Answer

A)  Processing of control activities. 
B)  Separation of various computer system functions. 
C)  Appropriate documentation of the data processing system. 
D)  Control over physical access to computer hardware. 
A)  Processing of control activities. 
B)  Separation of various computer system functions. 
C)  Appropriate documentation of the data processing system. 
D)  Control over physical access to computer hardware.

Question 3

Regardless of the assessed level of control risk,an auditor of a nonpublic company would perform some

Accepted Answer

A)  Tests of controls to determine the effectiveness of internal control policies. 
B)  Analytical procedures to verify the design of internal control activities. 
C)  Substantive tests to restrict detection risk for significant transaction classes. 
D)  Dual-purpose tests to evaluate both the risk of monetary misstatement and preliminary control risk. 
A)  Tests of controls to determine the effectiveness of internal control policies. 
B)  Analytical procedures to verify the design of internal control activities. 
C)  Substantive tests to restrict detection risk for significant transaction classes. 
D)  Dual-purpose tests to evaluate both the risk of monetary misstatement and preliminary control risk.

Question 4

Discuss some of the problems in establishing an internal control system in a small business.

Accepted Answer

Internal control problems in small busin

Question 5

To reduce the final control risk assessment to a low level,auditors need to determine only the required degree of compliance with the control policies and procedures.

Accepted Answer

A) True 
 B)False

Question 6

Which of the following would not be considered a control activity?

Accepted Answer

A)  Assessment of control risk. 
B)  Performance reviews. 
C)  Physical controls. 
D)  Information processing controls. 
A)  Assessment of control risk. 
B)  Performance reviews. 
C)  Physical controls. 
D)  Information processing controls.

Question 7

_____________________________________ reduces opportunities for a person to be in a position to perpetrate and conceal errors and frauds when performing their normal duties.

Accepted Answer

Separation

Question 8

When planning an audit of internal controls for an issuer,the audit team should

Accepted Answer

A)  Identify significant accounts, locations, and assertions. 
B)  Conduct a walkthrough of the internal control process. 
C)  Make inquiries of employees regarding the existence of control activities. 
D)  Reperform control activities performed by client employees to determine their effectiveness. 
A)  Identify significant accounts, locations, and assertions. 
B)  Conduct a walkthrough of the internal control process. 
C)  Make inquiries of employees regarding the existence of control activities. 
D)  Reperform control activities performed by client employees to determine their effectiveness.

Question 9

When completing the audit of internal controls for an issuer,AS 5 requires auditors of public companies to report on:

Accepted Answer

A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D 
A)  Option A 
B)  Option B 
C)  Option C 
D)  Option D

Question 10

The primary reason to evaluate internal control is to formulate constructive suggestions for improvement.

Accepted Answer

A) True 
 B)False

Question 11

When the audit team increases the planned assessed level of control risk because certain control activities were determined to be ineffective,the audit team would most likely increase the

Accepted Answer

A)  Extent of substantive tests of details. 
B)  Level of inherent risk. 
C)  Extent of tests of controls. 
D)  Level of detection risk. 
A)  Extent of substantive tests of details. 
B)  Level of inherent risk. 
C)  Extent of tests of controls. 
D)  Level of detection risk.

Question 12

The audit team is responsible for the client's internal control.

Accepted Answer

A) True 
 B)False

Question 13

The "obtaining an understanding" work phase (phase 1)of internal control evaluation would not give auditors an overall acquaintance with the client's

Accepted Answer

A)  Control environment. 
B)  Information and communication system. 
C)  Control activity effectiveness. 
D)  Monitoring activities. 
A)  Control environment. 
B)  Information and communication system. 
C)  Control activity effectiveness. 
D)  Monitoring activities.

Question 14

The key person in the internal control system of a small business is the independent auditor.

Accepted Answer

A) True 
 B)False

Question 15

What are the six steps auditors of public companies should use to audit internal control over financial reporting (ICOFR)?

Accepted Answer

1.Planning the engagement.
2.Using a top

Question 16

Which of the following client internal control activities is not usually performed in the treasurer's department?

Accepted Answer

A)  Verifying the accuracy of checks and vouchers. 
B)  Controlling the mailing of checks to vendors. 
C)  Approving vendors' invoices for payment. 
D)  Canceling payment vouchers when paid. 
A)  Verifying the accuracy of checks and vouchers. 
B)  Controlling the mailing of checks to vendors. 
C)  Approving vendors' invoices for payment. 
D)  Canceling payment vouchers when paid.

Question 17

A transaction-level internal control activity is best described as

Accepted Answer

A)  An action taken by auditors to obtain evidence. 
B)  An action taken by client personnel for the purpose of preventing, detecting, and correcting errors and frauds in transactions to eliminate or mitigate risks identified by the company. 
C)  A method for recording, summarizing, and reporting financial information. 
D)  The functioning of the board of directors in support of its audit committee. 
A)  An action taken by auditors to obtain evidence. 
B)  An action taken by client personnel for the purpose of preventing, detecting, and correcting errors and frauds in transactions to eliminate or mitigate risks identified by the company. 
C)  A method for recording, summarizing, and reporting financial information. 
D)  The functioning of the board of directors in support of its audit committee.

Question 18

Management's report on internal controls must include each of the following except

Accepted Answer

A)  A statement that management is responsible for establishing and maintaining adequate internal control over financial reporting. 
B)  A statement identifying the framework management uses to evaluate the effectiveness of the company's internal control. 
C)  A statement providing management's assessment of the effectiveness of the company's internal control. 
D)  A statement providing management's evaluation of the company's control environment. 
A)  A statement that management is responsible for establishing and maintaining adequate internal control over financial reporting. 
B)  A statement identifying the framework management uses to evaluate the effectiveness of the company's internal control. 
C)  A statement providing management's assessment of the effectiveness of the company's internal control. 
D)  A statement providing management's evaluation of the company's control environment.

Question 19

The most efficient means of gathering evidence about the internal control is to conduct a formal interview with knowledgeable managers and

Accepted Answer

A)  Write a narrative description of each important control. 
B)  Prepare a flowchart illustrating the internal control. 
C)  Prepare a well-indexed file of audit documentation. 
D)  Use an internal control questionnaire. 
A)  Write a narrative description of each important control. 
B)  Prepare a flowchart illustrating the internal control. 
C)  Prepare a well-indexed file of audit documentation. 
D)  Use an internal control questionnaire.

Question 20

Which of the following is a preventive control?

Accepted Answer

A)  Reconciliation of a bank account. 
B)  Recalculation of a sample of payroll entries by internal auditors. 
C)  Separation of duties between the payroll and personnel departments. 
D)  Detailed fluctuation analysis completed by the CFO for revenue. 
A)  Reconciliation of a bank account. 
B)  Recalculation of a sample of payroll entries by internal auditors. 
C)  Separation of duties between the payroll and personnel departments. 
D)  Detailed fluctuation analysis completed by the CFO for revenue.

The primary objective of procedures performed to obtain an understanding of the entity's internal control is to provide an auditor

In computer systems,the information technology general controls (ITGC)would not include

Regardless of the assessed level of control risk,an auditor of a nonpublic company would perform some

Discuss some of the problems in establishing an internal control system in a small business.

To reduce the final control risk assessment to a low level,auditors need to determine only the required degree of compliance with the control policies and procedures.

Which of the following would not be considered a control activity?

_____________________________________ reduces opportunities for a person to be in a position to perpetrate and conceal errors and frauds when performing their normal duties.

When planning an audit of internal controls for an issuer,the audit team should

When completing the audit of internal controls for an issuer,AS 5 requires auditors of public companies to report on:

The primary reason to evaluate internal control is to formulate constructive suggestions for improvement.

When the audit team increases the planned assessed level of control risk because certain control activities were determined to be ineffective,the audit team would most likely increase the

The audit team is responsible for the client's internal control.

The "obtaining an understanding" work phase (phase 1)of internal control evaluation would not give auditors an overall acquaintance with the client's

The key person in the internal control system of a small business is the independent auditor.

What are the six steps auditors of public companies should use to audit internal control over financial reporting (ICOFR)?

Which of the following client internal control activities is not usually performed in the treasurer's department?

A transaction-level internal control activity is best described as

Management's report on internal controls must include each of the following except

The most efficient means of gathering evidence about the internal control is to conduct a formal interview with knowledgeable managers and

Which of the following is a preventive control?

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters

Exam 5: Risk Assessment: Internal Control Evaluation

The primary objective of procedures performed to obtain an understanding of the entity's internal control is to provide an auditor

In computer systems,the information technology general controls (ITGC)would not include

Regardless of the assessed level of control risk,an auditor of a nonpublic company would perform some

Discuss some of the problems in establishing an internal control system in a small business.

To reduce the final control risk assessment to a low level,auditors need to determine only the required degree of compliance with the control policies and procedures.

Which of the following would not be considered a control activity?

_____________________________________ reduces opportunities for a person to be in a position to perpetrate and conceal errors and frauds when performing their normal duties.

When planning an audit of internal controls for an issuer,the audit team should

When completing the audit of internal controls for an issuer,AS 5 requires auditors of public companies to report on:

The primary reason to evaluate internal control is to formulate constructive suggestions for improvement.

When the audit team increases the planned assessed level of control risk because certain control activities were determined to be ineffective,the audit team would most likely increase the

The audit team is responsible for the client's internal control.

The "obtaining an understanding" work phase (phase 1)of internal control evaluation would not give auditors an overall acquaintance with the client's

The key person in the internal control system of a small business is the independent auditor.

What are the six steps auditors of public companies should use to audit internal control over financial reporting (ICOFR)?

Which of the following client internal control activities is not usually performed in the treasurer's department?

A transaction-level internal control activity is best described as

Management's report on internal controls must include each of the following except

The most efficient means of gathering evidence about the internal control is to conduct a formal interview with knowledgeable managers and

Which of the following is a preventive control?

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Finance and Investment Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Governmental and Fraud Audits

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing in a Computerized Environment

Filters